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Genyo Takeda produced the Punch-Out!! arcade games and directed the NES versions. Because the NES was not as powerful as the arcade hardware, Takeda and his crew realized that it would be impossible for the NES port to faithfully emulate the arcade graphics. Instead of making the playable boxer wire-framed or transparent in order to see an opponent, they decided to make the playable boxer more short-bodied, so that players could easily see opponents over the large head room of the playable boxer. Other things added to the NES version that the arcade versions lacked were a rough plot, a background music track played during fights, animated cutscenes and a password system for saving progress.

Around the time the Gold Version was released, Nintendo of America's founder and former president Minoru Arakawa attended a boxing match featuring future heavyweight champion Mike Tyson. While watching the boxer fight, Arakawa became so astonished with the athlete's "power and skill", he was inspired to use the athlete's name and likeness in the upcoming port of the Punch-Out!! series to help the game sell well.[2] Tyson was rumored to have been paid $50,000 for a three-year period for his likeness. This was something of a chance for Nintendo, as it occurred before Tyson won the World Boxing Council (WBC) heavyweight championship from Trevor Berbick on November 22, 1986.[3]

A screenshot depicting Punch-Out!!'s gameplay. In it, Little Mac has punched at the right time to defend himself against Bald Bull's "Bull Charge", instantly knocking him down.

Punch-Out!! features a boxer known as Little Mac, fighting his way up through ranks of the World Video Boxing Association. After facing a series of colorful fictional opponents in three circuits, the goal is to win a final "Dream Fight" against a highly skilled boxer – the real-life Mike Tyson, then-World Heavyweight Champion, in the original release; or the fictional Mr. Dream in the later version.

Little Mac has a limited repertoire compared to most of his opponents. His punches are limited to left and right jabs, left and right body blows, and a powerful uppercut. The uppercut can only be used once the player earns a star, which is typically accomplished by counter-punching the opponent directly before or after certain attacks are launched. The player can acquire up to three stars. To perform the uppercut, the player needs to press the start button once a star is earned. To defend, Mac can dodge left or right, duck, and block punches by putting up his guard.

Little Mac also has a heart counter, which decreases upon being hit, blocking a punch, or throwing a punch that the opponent dodges or blocks. When the counter decreases to zero, Little Mac temporarily turns pink and appears exhausted, leaving the player unable to attack but still able to dodge, duck, and block. At this point, Mac can regain some hearts (and his normal color palette) only by avoiding the opponent's punches. He immediately loses all of his hearts upon being knocked down, but can regain some by getting up.

A bout can end by knockout (KO), if a fighter is unable to get up within ten seconds after being knocked down; by technical knockout (TKO), if a fighter is knocked down three times in one round; or by decision, if the bout lasts three full rounds without a clear winner. In order to win by decision, the player must accumulate higher than a certain point total by punching the opponent and/or knocking him down; the needed total varies from one boxer to the next. However, some bouts cannot be won in this manner and will automatically result in a loss for the player if the opponent is not knocked out. Mac can only get up three times during any one bout; if he is knocked down a fourth time, he will be unable to rise and thus lose by knockout.

When Mac loses his first bout to a ranked opponent, he will have a chance to fight a rematch. However, if he loses a Title Bout, he will fall in the rankings – one place for the Minor or Major Circuits, two places for the World Circuit. Losing a rematch causes him to fall one place (unless he is already at the bottom of his circuit), forcing him to fight his way back up. A third loss (not necessarily a consecutive one), or a loss in the Dream Fight, ends the game.

Little Mac faces a total of 14 opponents: three in the Minor Circuit, four in the Major Circuit, six in the World Circuit, and Tyson/Mr. Dream. However, three of the World Circuit bouts involve previously defeated opponents with new moves.

Many of the opponent character sprites are each used twice (including Tyson/Mr. Dream, whose sprites are shared with Piston Honda), just changing the head image, colors, and special moves. King Hippo is the only character not to share his sprites with another fighter.

Before the release of Mike Tyson's Punch-Out!! in North America, Nintendo released the game in a gold-colored Famicom cartridge simply titled Punch-Out!! in Japan, without Mike Tyson in it, as a prize for the Golf U.S. Course Famicom Tournament in September 1987.[4] The final opponent in this version was Super Macho Man, who was also the final opponent in the Super Punch-Out!! arcade game.

When Mike Tyson's Punch-Out!! sold well in North America, Nintendo later released the Mike Tyson version in Japan.[5]

After Nintendo's license to use Mike Tyson as a special Punch-Out!! character expired (Nintendo decided against renewing it due to his recent defeat by James "Buster" Douglas),[citation needed] Nintendo replaced Tyson with a fictional character called Mr. Dream and re-released the game as simply Punch-Out!! in limited quantities in North America in August 1990[6] and in Europe in 1991.[7]

Punch-Out!! Featuring Mr. Dream was released on Wii's Virtual Console service on March 30, 2007 in Europe and Australia, on April 3, 2007 in Japan, and on April 16, 2007 in North America; it was released on the Nintendo 3DS's Virtual Console service on February 1, 2012 in Japan, on March 1, 2012 in Europe and Australia, and on March 8, 2012 in North America; it was released on the Wii U's Virtual Console service in North America, Europe, and Australia on March 20, 2013, and in Japan on June 5, 2013.

Punch-Out!! has been well received by critics. A GameSpot reader poll ranked it as the 6th greatest NES game. It was rated the 17th best game made on a Nintendo System in Nintendo Power's Top 200 Games list.[11] In August 2008, Nintendo Power listed it as the sixth best Nintendo Entertainment System video game, praising it for putting arcade-style fun over realism.[12] Author Steve L. Kent called it the second major game of 1987.[3] Author Nathan Lockard cited the graphics, violence, controls, and the variety of it being a "true classic" and one of the best NES games.[13]GamesRadar ranked it the 11th best NES game ever made. The staff called it a "brilliant puzzle game [disguised] as a sports game."[14]Punch-Out!! sold in excess of 2 million copies.[15]Game Informer ranked the Mike Tyson version as its 14th favorite game ever in 2001. The staff noted that no boxing game since Punch-Out has been as "beloved."[16]

Punch-Out!! was featured in the comic books of Valiant's Nintendo Comics System. Three stories are based around Little Mac, Doc Louis, and other boxers from the NES version and Mac briefly appears in the comic that introduces the story of Captain N: The Game Master. Mac doesn't appear in the Captain N stories himself; however, King Hippo is featured as a villain. Also, in the opening sequence of the Captain N TV series, the protagonist Kevin Keene was seen playing Mike Tyson's Punch-Out!! before being forced into a vortex that formed in his television's screen.[17]

Punch-Out!! made an appearance on The Tonight Show on October 29, 2014. Mike Tyson, being one of the guests that night, was challenged by the host, Jimmy Fallon. He was asked to defeat himself in the game on live TV. The real Mike Tyson was defeated in the first round and lost by TKO.

After the release of Punch-Out!!, Krome Studios Melbourne began developing an official sequel starring Mike Tyson with manager Don King. Originally titled Mike Tyson’s Intergalactic Power Punch, the game was supposed to take the series into outer space where Tyson would participate in an intergalactic boxing tournament against various space aliens.

The game's production ran into immediate trouble, however, following Tyson's 1991 incarceration for the rape of Desiree Washington. Beam changed the Tyson character's name to Mark Tyler and modified King but did little to change Tyson's in-game character sprite.

Nintendo saw the game and disliked it, refusing to publish it due to lack of quality. Eventually, ASC Games published the title, and the game was released on the NES as Power Punch II, despite the fact that it was the first Power Punch title.